India likely to export surplus sugar this year
India will be able to keep exporting sugar without government subsidies if global prices stay close to current levels, according to Somit Banerjee, head of trading at Dubai-based refiner Al Khaleej Sugar Co.
The country’s sugarcane production could be slightly higher in the next season as farmers are encouraged to boost planting on the back of higher exports and diversion to ethanol, Banerjee said in an interview at the Globoil International conference in Dubai. While India’s consumption may also increase, it’s likely to have some surplus to export in 2022-23, he said.
“It’s a happy situation for India at the moment,” Banerjee said. “It has become a structural exporter and will keep exporting any surplus without subsidies if global prices are close to 19 cents.”
Benchmark sugar futures are at about 18.69 cents a pound. India, the world’s second-biggest producer and top consumer, is poised to ship a record nine million tonnes in the year ending September 30, the Indian Sugar Mills Association estimates.
According reports, international trade houses had indicated that the global market expected more than 85 lakh tonnes of sugar exports from India.
ISMA said India would export more than 90 lakh tonnes of sugar in the current season (October 2021 to September 2022).
Banerjee said ethanol programme is progressing well in India and the country is unlikely to have large surpluses in the years to come.
“India could have some sugar available for exports and that will help keep global supply and demand in balance,” he said.
In April, the Indian
Sugar Mills Association (ISMA) said the production till March 31, 2022 since October 1 last year was 310 lakh tonnes and sugar mills in Maharashtra and Karnataka continued to crush cane.
In March, the association had estimated sugar production in Maharashtra and Karnataka at 126 lakh tonnes and 55 lakh tonnes respectively. It has now revised the estimates to
134 lakh tonnes and 62 lakh tonnes, after diversion for ethanol.
Banerjee said Indian sugar will keep competing with supplies from Brazil in Asian markets due to freight advantage.
Spread between March
2023 and July 2023 futures contracts shows the market needs Indian sugar.
Thai production is returning to normal but won’t be able to replace India in markets captured by the South Asian nation in the past two years, should Brazilian supplies fail to adequately recover.